Turkey’s lira nears record lows as investors weigh virus fallout

The Turkish lira fell for a fourth straight session on Tuesday and headed toward record lows, as investors fretted about fallout from the coronavirus pandemic even as Ankara set out plans to revive the hard-hit economy. 

Turkey’s treasury took advantage of a recent drop in yields to sell some $1.6bn in debt, while the central bank raised forex-lira swap market transaction limits to 40 percent from 30 percent, bankers told Reuters news agency.

The lira – which hit an all-time low of 7.24 during a currency crisis in August 2018 – weakened 0.7 percent to 7.0900.

It has fallen 16 percent this year amid the COVID-19 outbreak that has claimed at least 3,461 lives in Turkey.  New cases have fallen in recent days, clearing the way for Ankara to begin easing containment measures.

President Recep Tayyip Erdogan said on Monday that the government was lifting intercity travel restrictions in seven provinces and easing a curfew imposed on senior citizens and youths.

Shopping malls, barber shops and some stores will be allowed to open on May 11 provided they abide by so-called normalisation rules. Universities would return to their academic calendars on June 15 under the plan.

Some medical and business leaders cautioned against moving too quickly, but others said they were ready. The industry ministry said most auto factories had resumed production and that all major factories will have restarted by May 11.

“Our industrialists have an appetite to return to production [and] I think the wheels of industry will begin to turn in June,” Istanbul Chamber of Industry Chairman Erdal Bahcivan said in an online meeting.

Yet Sinan Adiyaman, chairman of the Turkish Medical Association, said in an online news conference that normalisation measures needed to be taken to avoid jeopardising progress made against the outbreak.

“The measures … need to be taken independently from market expectations and rather based on scientific, epidemiologist data and in accordance with a medical coordination,” he said, adding the slowdown in deaths and confirmed cases was positive.

The chairman of Kigili men’s wear, Abdullah Kigili, said shops will not be ready to open in malls on May 11, but will rather target a June 1 opening.

After Turkey’s treasury borrowed some 9 billion lira on Monday, two more bond auctions were held Tuesday, including 4 billion lira ($565m) of its new two-year benchmark bond to primary dealers in non-competitive bids, and 1.5 billion lira in a tap of a five-year CPI-indexed bond before the auctions.

The government also sold a net 3,309.3 million lira of the benchmark bond and 2,272.9 million of the CPI-indexed bond, bringing total sales on Tuesday to around 11.1 billion lira ($1.6bn).